Driver Inc. makes no sense for carriers, either
I got a call recently from a fellow who had Googled us and his first words to me were, “My boss wants me to incorporate. It looks like you guys can do that and look after my books for me.”
I said, “Do you own a truck?”
“No,” he said. “I just drive.”
I asked whether he’d seen my column in Truck News last month. It was about Canada Revenue Agency’s (CRA) decision to declare incorporated self-employed drivers as Personal Service Businesses, or PSBs.
I sent him a link and asked him to call me back after he’d read it.
As we start the new year, I’d like to think we can close the book on the issue of self-employed drivers, or driver services. I’ve said this is my last column about it, although that’s unrealistic, of course, because some form of Driver Inc. probably will never truly go away.
The CRA decision about PSBs means self-employed drivers are no longer allowed to claim any expenses other than payroll, and are also taxed at a much higher rate. Without those benefits, the arrangement has virtually no advantage for drivers.
But what about for the carrier? Well, let’s talk about Employment and Social Development Canada’s (ESDC) position on the matter.
In a letter to the Canadian Trucking Alliance (CTA), ESDC echoed its long-established guidelines about how it determines employer-employee status. It also said incorporation does not factor heavily into the determination of employer-employee status, and, as such, “Personal Service Business(es) would not have a special status under the Code.”
Got that? No special status.
According to ESDC, incorporated drivers operating company vehicles should get the same treatment under the law as employees with regard to pay for overtime, holidays, vacation, as well as termination and severance.
If you’re an incorporated driver, did you get vacation pay this year? Last year? You’re entitled to it. The basic 4% multiplied by your gross income over the last year or two is a lot of money.
What about “wages” for Christmas, Boxing Day, and other statutory holidays? There are nine or 10 of those, depending on where you live.
Did a carrier let you go, or fire you without cause or explanation? Did you not receive proper notice or termination pay? Did the carrier you work for short your pay for the miles you ran or not compensate you for time spent waiting for a load?
You don’t need to hire your own lawyer to go to battle over a payment dispute. Since you’re no different from an employee under the law, you can file a complaint with the Canada Labour Board. ESDC is prepared to investigate and enforce its interpretation of your status.
“While the Labour Program primarily encounters these cases based on individual complaints, we do conduct inspections in high-risk industries and would consider targeting businesses that operate using a Driver Inc. model if they can be identified,” ESCD told the CTA.
If CRA’s policy on taxes and expense deductions is a showstopper for the incorporated driver, the ESDC position is a game-changer for the carrier. It absolutely makes things better for drivers, though, because now there’s no doubt that you’re covered by the Canada Labour Code.
When the driver called me back after reading last month’s column, he said, “I guess that’s the end of the road for the incorporated driver.”
I told him I wasn’t so sure.
Carriers and drivers are already scrambling to find ways around the CRA and ESDC policies, including how to make the Driver Inc. look like Driver Lease Operator Inc.
So maybe this won’t be my last column on the subject. But it should be.
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Scott Taylor is vice-president of TFS Group, providing accounting, bookkeeping, tax return preparation, and other business services for owner-operators.
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Everyone must declare what they make and put everyone on level ground . Very positive approach . Cheers CRA
This needs to be a very clear law without any ambiguity . Most carriers don’t even know about it . And if you don’t agree to incorporate then guess what ? You don’t get the job as a driver .
Then carriers complain about a driver shortage .
And if you do agree to their Driver inc demand and then complain and file a complaint with the Canada Labour Board due to injustices , the Canada Labour Board themselves lack organization and structure . Ie: You send in the documents and proof of your complaint , then they photo copy documents rather than send the originals to another office in another province . Then the agent from another province calls you and has only bits of info rather than the originals and this creates confusion for both parties . And the time between receiving the complaint and actually beginning to work on it is tremendous due to a backlog of an enormous amount of complaints .
It’s a little like the ELD’s coming into law . It was rushed and ill prepared . You can’t enforce a new law if what it concerns is unprepared for the new law . Lack of parking spaces , shippers still abusing wait time and not paying for detention etc.
Before making a new law , INFORM people that it concerns . Make sure parking is available at truck stops or that there are enough truck stops for drivers to park once they’ve achieved their maximum HOS . You can’t just make up a new law and then say “well it’s their problem to organize themselves” …… You’re creating chaos !!! Shippers are not becoming smarter nor acting fair due to a new law .
Just like saying Driver inc. is an employee status . Do you think carriers care ??? Most couldn’t give a damn . They find the loophole convenient and they will continue to use it unless it is illegal to hire a Driver inc. And it’s not “illegal” to demand that a driver be incorporated . So carriers will continue to demand drivers be incorporated and take advantage of the ignorance . They couldn’t careless about the lack of fairness it causes to a driver . And the grief it causes drivers to go through a complaint and the time it takes is outrageous ! Carriers are looking for ways to protect themselves and lack the understanding of what driver inc. rules entail ! They think that it simply means that they can bypass responsibilities on their end and force those responsibilities on drivers . The corruption in the industry is enormous ! From shippers to dispatchers , to carriers , to drivers ! The whole industry needs to be restructured , the whole industry !
Trucking associations and the government have managed to open a huge can of worms but lack the knowledge on how to deal with it . That’s the problem ………
So it’s quite cute to say , well you have to do this and that etc. but it’s not working !
I come across these companies everyday in my line of work. They are cheating the taxpayers of Canada, not just other trucking companies. By not paying employer share of EI and CPP and allowing the drivers to under report their wages, the Healthcare tax and every other social benefit is being under funded. If you send kids to school, use the hospitals, go to the library, drive on the roads, and anything else that is funded or supplemented by tax payers, you should pay your fair share. The majority of the offenders are immigrants from a country that has no taxation and therefore has no social structure in place for education or healthcare. It is a pay to use system, if they can afford it. In Canada, they use these services and try to get away with paying as little as possible. This is unfair to all Canadian Tax payers and the legitimate businesses that operate within the law. Businesses that are responsible enough to report the cheaters, not encourage them.
I had already in the truck industry as a driver for too many years,I think every body understands the ” driver Inc” problem is from the truck company which is employer,not from any of the drivers.
And the only solution can be find will between the government and the truck company only.
I guess this government is broke and looks to ways to restrict more and more the small business and grab the cash. Is like the WSIB. Is mandatory even I have for my employees ten times better insurance which cover them outside the work also. They figure out that they lose revenue because nobody declares what they make for real.